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This study aims to examine the impact of geopolitical uncertainty and inflation on green energy consumption. In addition, it aims to reveal the cause-and-effect relationship among these variables.

The authors exert the panel dynamic ordinary least squares (OLS) approach of Kao and Chiang (2000) and the Granger non-causality method of Dumitrescu and Hurlin (2011). On the other hand, current study relies on the annual time series data of 29 countries from 1985 to 2022.

The panel dynamic OLS results confirm a long-run relationship between geopolitical uncertainty, inflation and green energy consumption. On the other hand, inflation negatively impacts green energy consumption, with high inflation levels potentially halting the transition. Conversely, geopolitical uncertainty shows no significant effect on green energy use, indicating a reliance on traditional energy sources. Moreover, the current investigation reveals the unidirectional causality from green energy consumption to inflation, while no short-run causality exists from inflation as well as geopolitical uncertainty to green energy consumption in the selected countries.

The authors drew conclusions about the potential impact of geopolitical uncertainty and inflation on green energy uses by considering the macro-level data. However, this investigation further be enhanced by looking at such issues through the micro perspective by understating the thought and perspective of public on the implication of geopolitical uncertainty and inflation on green energy uses. Such micro-level, country-specific study would definitely help us to generate more concrete ideas about such themes.

The empirical findings have important implications for policymakers. Results suggest that high inflation negatively impacts green energy use, so policymakers must consider implementing measures to control the inflation while promoting green energy uses for economic prosperity and environmental sustainability. In the short run, green energy use leads to inflation. Therefore, macroeconomic policymakers can implement various subsidy policies for the general public to mitigate the short-term inflationary impact of green energy use.

This investigation is novel in three ways. First, it explores the impact of geopolitical uncertainty and inflation on green energy use, using Caldara and Iacoviello’s (2022) geopolitical risk index as a proxy of geopolitical uncertainty. Second, it uses panel data econometric analysis, a method that most previous studies have not contemplated for this type of investigation. Finally, by including both advanced and emerging economies, it provides valuable insights for policymakers to develop effective strategies related to green energy consumption for achieving sustainable economic development.